Calculate Your Financial Independence & Early Retirement Number (4% Rule)
FIRE (Financial Independence, Retire Early) is a movement focused on aggressive saving and investing to retire decades earlier than traditional retirement allows. The core principle is the 4% Rule: You can safely withdraw 4% of your investment corpus annually without running out of money for 30+ years.
Example: If your annual expenses are ₹6,00,000, your FIRE number is ₹1.5 crore (₹1,50,00,000)
Stop active investing. Your existing corpus will grow to full FIRE number by retirement age.
Corpus needed today to coast to retirement
Semi-retirement with part-time work covering 50% of expenses.
50% of full FIRE number
Minimal lifestyle retirement with 70% of current expenses.
70% of full FIRE number
Luxurious retirement with 150% of current expenses.
150% of full FIRE number
Follow these simple steps to calculate your Financial Independence Retire Early (FIRE) number and plan your early retirement journey.
1. Add a Buffer: Always add 20-30% buffer to your calculated FIRE number for emergencies and healthcare costs.
2. Review Annually: Recalculate your FIRE plan every year as your expenses, income, and goals change.
3. Consider Healthcare: Include comprehensive health insurance costs in your monthly expenses.
4. Plan for Taxes: Remember that some investment withdrawals are taxable - factor this into your planning.
Where: PV = Present Value (Current Corpus), r = Monthly Return Rate, n = Number of Months, SIP = Monthly Investment
A: The FIRE number is the total corpus (net worth) you need to achieve Financial Independence and Retire Early. It is calculated using the 4% rule: FIRE Number = Annual Expenses × 25. For example, if your annual expenses are ₹6,00,000, your FIRE number would be ₹1.5 crore (₹6,00,000 × 25 = ₹1,50,00,000). This corpus, when invested properly, can generate enough returns to sustain your lifestyle indefinitely.
A: The 4% rule states that you can withdraw 4% of your investment corpus annually in retirement without running out of money for 30+ years. This is based on the Trinity Study analyzing historical market data showing that a portfolio of 60% stocks and 40% bonds can sustain a 4% annual withdrawal rate adjusted for inflation. Example: With ₹1 crore corpus, you can withdraw ₹4 lakhs per year (4% of ₹1 crore) to cover your expenses.
A: Coast FIRE means you have saved enough that your existing investments will grow to your full FIRE number by retirement age, even if you never invest another rupee. You can "coast" through life working part-time or in a lower-stress job since you no longer need to save aggressively. Example: If you have ₹50 lakhs at age 30 that will compound at 12% returns, it will grow to ₹2.48 crore by age 60 (30 years) without any additional investments. If your FIRE number is ₹2 crore, you've achieved Coast FIRE!
A: Barista FIRE is a semi-retirement strategy where you have saved enough to cover most of your expenses through investment withdrawals (typically 50%), but you work a part-time or low-stress job (like a barista at a coffee shop) to cover remaining expenses and health insurance. This lets you quit your high-stress corporate job earlier than full FIRE. Example: Your corpus covers ₹40,000/month expenses, and a part-time job or freelancing provides ₹20,000/month for extras and healthcare.
A: The FIRE corpus needed in India depends entirely on your annual expenses. Use the formula: FIRE Corpus = Annual Expenses × 25. Here are examples:
(1) Lean FIRE: Monthly expenses ₹30,000 → Annual ₹3.6L → FIRE corpus ₹90 lakhs
(2) Moderate FIRE: Monthly expenses ₹50,000 → Annual ₹6L → FIRE corpus ₹1.5 crore
(3) Comfortable FIRE: Monthly expenses ₹1,00,000 → Annual ₹12L → FIRE corpus ₹3 crore
(4) Fat FIRE: Monthly expenses ₹2,00,000 → Annual ₹24L → FIRE corpus ₹6 crore
Always add a 20-30% buffer for inflation, emergencies, and healthcare costs.
A: Lean FIRE: Retiring with minimal expenses (typically ₹25,000-40,000/month in India), requiring a smaller corpus. You live frugally, minimize discretionary spending, and focus on essential needs. Example: ₹30,000/month needs ₹90 lakhs corpus.
Fat FIRE: Retiring with a luxurious lifestyle (₹1,00,000+ monthly expenses), requiring a much larger corpus. You maintain or upgrade your current lifestyle with travel, entertainment, hobbies. Example: ₹1,50,000/month needs ₹4.5 crore corpus.
Most people aim for "Regular FIRE" between these extremes (₹50,000-80,000/month, ₹1.5-2.4 crore corpus).
A: Time to FIRE depends on your savings rate (percentage of income saved), not your absolute income. Higher savings rate = faster FIRE. Here's the math:
• 30% savings rate: ~28 years to FIRE
• 40% savings rate: ~22 years to FIRE
• 50% savings rate: ~17 years to FIRE
• 60% savings rate: ~12.5 years to FIRE
• 70% savings rate: ~8.5 years to FIRE
Use our calculator to input your monthly SIP, expected returns (10-12% for equity), and step-up percentage to calculate your exact timeline. Someone earning ₹50K saving 50% will reach FIRE faster than someone earning ₹2L saving 20%!
A: Yes! Inflation is absolutely critical in FIRE planning. A ₹50,000/month expense today will become ₹1,35,000/month in 20 years at 5% inflation, or ₹1,77,000/month at 6.5% inflation. Always calculate future expenses with inflation adjustment and add a 20-30% buffer to your FIRE corpus for unexpected costs. Our calculator includes automatic inflation adjustment to show realistic retirement numbers. Never plan FIRE using today's expenses - you'll fall short by millions! Also remember that healthcare inflation is typically higher (8-10%) than general inflation.